Financial Luminary: Peter Lynch

by Dual Income No Kids on October 1, 2009 · 0 comments

Peter Lynch is generally regarded as one of the greatest stock pickers of all time. His fund management is the stuff of legends, and as I started to learn more about him and his financial philosophy, he became a huge influence on me. As such, he will be the focus of my next two blog posts. Today I will be talking about who Peter Lynch is, and my next post will review his financial philosophy, and what I personally have learned from him.

I initially gravitated towards Peter Lynch because my father had given me a stack of his financial books, and had told me that everything I needed to know about money, retirement and investing could be found in those books. Included in that stack was Lynch’s “Learn to Earn” and “Beating the Street”, which I randomly decided to read first. It turned out to be an excellent decision. I loved the book so much I have a notebook filled with notes that I jotted down as I read that book and again when I read “Learn to Earn”. I have often referred back to those notes when looking at stocks, and it’s not too much of a stretch to say that his advice has helped me a great deal.
Peter Lynch was born on January 19th, 1944. His start on the path that lead him to his current reputation for being a world-renown stock picker is a case study in luck and putting yourself in the best position possible to take advance of said luck. He became interested in stocks when he would caddy for financial executives in Newton, Massachusetts. His expressed interest and intelligence eventually lead one of those executives, the President of Fidelity Investments, to offer him an internship with the company. He attended Boston College on scholarship, graduating in 1965. He eventually received his MBA from the University of Pennsylvania’s Wharton School of Business and served two years in the Army.
When his education and armed service experience was completed, Lynch was able to get a full-time job at Fidelity as a research analyst, mostly dealing with the textile and metals industry, making $16,000 a year. Roughly eight years later he was put in charge of the Magellan Fund, a capital appreciation fund worth around $20 million dollars (back in 1977). By 1983 the fund has passed $1 Billion in value, eventually crossing the $5 Billion and $10 Billion thresholds. By the time he retired in 1990 (at the age of 46; not a bad retirement age) the Magellan Fund’s value had increased by over 2,700% (in a period from 1977 to 1990, which included both a strong bull market and the crash of 1987).

Peter Lynch stated that his reasons for retiring didn’t have anything to do with Fidelity, or the stresses of his job. He once quipped: “I get paid extremely well. We had free coffee. I mean, it’s a great place to work.” He felt like the six days a week he was working, plus the insane hours during those days was too much, and he wanted to focus on other pursuits. He’s famous for saying: “When the operas outnumber the football games three to zero, you know there is something wrong with your life.”

His retirement days have been spent working part-time as vice chairman of the investment branch of Fidelity, and organization named Fidelity Management and Research Co. where he has taken a mentorship role, while refraining from actually placing any trades. Most of his time is spent with his philanthropy (saying the charity is a form of investment; an idea that I love). His donations support a variety of causes, including historical societies, religious organizations and medical funding. His ability to build wealth has allowed him to be the philanthropist he is today.

In my next post, I will talk about Lynch’s investment strategy and how he has influenced how I invest my money. Stay tuned!
Twitter: @michael_dink

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